I have Bob Udell and Steve Childers from Consolidated Communications with me this morning. Thanks to both of you for joining. I'm gonna assume all of you know Bob and Steve, and you've been through the investor deck. If you haven't, if you don't have it, please pull it off the website or reach out to one of the team, and we'll get the latest deck over to you. Since fiber and the future are the focus of the conference this year, I'm gonna focus most of my questions there, and then maybe come back to results and guidance towards the end of the conversation, if that's okay. Sort of getting right into it, starting off with deployment. The plan, guys, is to deploy fiber to 1.6 million locations. It's about 70% of your footprint by the end of 2025. How did you arrive at the 1.6 million? Yeah. Well, first of all, Jonathan, thanks to you and New Street for the invitation to the conference and for giving us the opportunity to discuss the company and our multiyear value creation plan. The 1.6 million really is representing 70% of our current footprint. We believe these upgrades will create significant value by not only bringing fiber to former copper locations over the next five years, but deliver material revenue growth and margin expansion as we hit the penetration targets and realize the cost benefit of a fiber-first broadband network. This upgrade plan represents 70% of the current footprint. That's 1.1 million of our upgrades targeting Northern New England markets of Maine, Vermont, New Hampshire, where we have some of the best returns. That is a result of having unique deployment advantages through the density of the underlying fiber network that was there, to serve corporate, you know, business enterprise and [CLEC] backhaul customers, and its proximity to residential customers and the amount of aerial infrastructure. We believe the Fidium Fiber Gig+ offerings that we launched last November, and pricing give us a strong competitive positioning. Got it. It's a function of, I'm assuming, density, where you've got aerial plants, so that has a big impact on the cost to deploy. To what extent the sort of competitive dynamics in the market factor into where you decide to build? Yeah, sure. It's analysis of all those factors. One of the most significant factors is the proximity to the customer opportunity. You know, it's just an incremental build from near- net fiber in many ways. The aerial plant factor in Northern New England certainly made that an even more attractive shortcut with the previous or historical low penetrations of broadband in those markets. Bob, are these all markets with a cable operator that you're competing against today? Are there any of the markets where you're deploying fiber where there are two strong operators already? Yeah. The majority of our markets have one competitor, and that's the cable company. That's roughly 80% of our markets. 10%, approximately, have you know, some sort of small overbuilder. You might have two competitors in a few markets. Roughly 10% have no other competitor, where we're the only threshold competitor, and the best next alternative or next best alternative is you know, in some small cases, fixed wireless or satellite. Right. The places specifically where you're deploying fiber, is there any overlap between the 1.6 million where you're deploying fiber and that 10% of the footprint where there are two guys already? No. Not, you know, in a few instances, but nothing material. Got it. Help us understand the pacing. You did about 331,000 locations in 2021. You're just targeting a fairly modest acceleration to 400,000 for the next couple of years, and then you slowed down towards the end of the process. Why the slowdown, and what prevents you from going faster than 400,000 in 2022 and 2023? Well, you gotta have a plan, right? You accurately represent our current build plan. Just by way of background, we started 2021 with only 10% of our homes passed all the way to, you know, the premises having access to 1 gig fiber services. Now, in many cases, the fiber was very close, but from a standing start, we more than doubled that 10% in 2021 with over 330,000 upgrades to, you know, roughly 21%. Our first year priority was to do just that, create the network build engine with the ability to scale, while also redefining the customer experience in parallel with that. You know, as we mentioned earlier, we're targeting 70% coverage by 2025. I fully expect we'll exceed that, and we've demonstrated our ability to build fiber now that we have the capacity to do over 100,000 a quarter. For 2022, in addition to the 400,000 planned upgrades, we're intensely focused on scaling the customer acquisition engine, creating the foundation for coordinated build and customer acquisition that will add value in 2022 and beyond. Now, could we flex up in later years? Absolutely. We'll continue to look at opportunities to expand the build and exceed that 70% coverage goal. Oh, that's interesting. You could exceed the 70% goal and the time it takes you to get there. I thought initially you were just referring to you'll get, you know, 70% of the homes that are economically attractive, but you might get there sooner than the end of 2025. Yeah, that's very possible. I think in the end, you know, as we progress through the plan and get the customer acquisition engine and the build plan, you know, fully coordinated so we're leveraging that first launch of a new distribution area, you'll see us, you know, continue to refine the plan in the outer years. You know, as with any plan, 2022 and 2023 are pretty well set. 2024 and 2025, you know, we remain opportunistic to expand, you know, coverage where it's economically feasible. Got it. The cost- to- pass numbers that you guys have put out have always been a little controversial in that they're lower than we've heard from Frontier and some of the other companies out there. Can you remind us why your costs are so much lower than peers on the cost- to- pass? Let me introduce my CFO, the bank CFO. Hey, Jonathan, good to see you, and thanks for handing me the controversial question. No, our cost- to- pass has been, you know, Bob highlighted some of the advantages we have in the Northern New England market based on the acquisition we made there in 2017. Our cost- to- pass being $550-$600, that's what we demonstrated in our 2021 build when we did the 330,000, and it's definitely in our guidance range for 2022. Again, we're doing over a million passings— over 1.6 million passings in the Northern New England markets where we have that significant cost advantage. Again, some people may calculate the numbers on cost- to- pass, cost- to- connect a little bit differently, but our numbers include, you know, the edge access equipment, the optical line terminal, the labor, and the fiber components as well. You know, again, we do think our numbers are— we've proven them. They're battle tested here in the last year and as we're going into 2022. We're really confident that we do have a strong competitive advantage compared to the peer group on the cost- to- pass. I guess the pushback might be that you're probably building out in the densest markets that are easiest to upgrade first. Why wouldn't that cost- to- pass sort of creep up closer towards where some of the other guys are as you get out, you know, towards the less dense, less easy- to- upgrade areas over time? Yeah, it could over time, but I think for the short term, the way we're leveraging a portfolio of assets, right? We're building in eight markets today. The three northern New England states are getting the majority of that build. Again, we're within the original $400-$450 just for northern New England. It could creep up as we go more rural or go into you know, less suburban markets. Again, to your point, we absolutely are building where we can take advantage, you know, basically are putting ourselves in the best foot forward, both from speed of build, the economics, you know, the yearly returns. Compared to our legacy markets, the traditional Consolidated markets, our cost- to- pass based on not having as much aerial, maybe longer runs for fiber connections will be a little bit higher than the $450 or $500 that we're seeing in Northern New England. We think on the aggregate, we're gonna be able to match, you know, stay kind of within that $600. Even if, to your point, it does creep up over time as we go more rural, we still think we're gonna have a really strong advantage compared to anybody else that's doing the same thing. Yes. Steve, remind us what about the New England assets that you guys have acquired makes it so inexpensive to upgrade? I get that I think most of it's aerial, but what else besides just the sort of the aerial buried mix? Bob mentioned that earlier, just the density of the network. I mean, you think about those three states are small geographically, but we had FairPoint or the company we acquired the property from had over 18,000 miles built a carrier class network. They just hadn't built the on-ramps and the off-ramps for consumers to get broadband speeds that we're talking about today. I think just the amount of fiber, the underlying fiber infrastructure for a carrier- class- like network, just the ability to upgrade, the proximity to the customer, as previously mentioned, and again, over 81% of the fiber infrastructure is aerial. It's a really strong cost advantage to us. Even again, we can't match that necessarily in some of our legacy markets where we still have good fiber infrastructure. Got it. Can you remind me which pieces of the deployment and installation are done by your own employees versus outside vendors like Dycom and MasTec and companies like that? Yeah. I'm sorry, Bob. I'll start, and you can finish it. Yeah. I would say 80% of it is contracted, 20% of it is with our own internal workforce. We again just signed a three-year labor agreement in northern New England. We're really partnering with the field technicians and the construction crews in northern New England and our employees. Everybody sees the value of driving fiber in the markets that we're serving today. Then we also, like 80% of it, as I mentioned, is being with contractors. We again we're really more focused on regional contractors where we can, as opposed to some of the national guys where we might not get as much attention. We're really building strong relationships at the regional level, and we have a really nice portfolio of contractors, and we can flex up or flex down as we need to hit our construction targets. What about the cost for that 80% piece, Steve? Have you seen that start to inch up given constraints in the labor market, particularly around construction resources? Yeah, let me take the supply side of that. We've really been fortunate to have built out in 2020, you know, end of 2020 and beginning of 2021, that regional support of contractors and our own teams that we began to retool successfully for slicing and some placement. So the 20% that Steve talked about that resulted from, you know, our labor agreement renegotiations and some retraining commitments we made that really serve us well are giving us that flex resource that allows us to flex up and also consistency in cost. Now, could there be in the future, you know, inflationary impacts on supply chain? Sure. So far, we're in good shape and haven't experienced that. Got it. Bob, how would you assess, or maybe this is a question for Steve, I'm not sure. How would you assess if you are hit with inflationary cost pressures, how does that ultimately get reflected in the business? Are you able to recapture that in ARPU? Would it mean that you build more slowly than initially anticipated? Would it mean that you maybe don't go to 70% of your footprint? If we do end up with a material increase in the cost- to- pass and cost- to- connect, how do you mitigate that? Well, when you look at the macroeconomic environment, which is probably the main thing you worry about, right? 'Cause it's something you can't control totally. You know, it's gonna affect everybody consistently to a large degree. Our pricing is very competitive. Our 1 gig is a $70 product, and so we've got headroom in that, you know, based on looking at the competitive situation in all of our markets. I think you have natural pricing flexibility, 'cause even when that promo wears, you know, goes out, we have some already going up, you know, $10, $15 after they end their year period of the $70 initial launch price. I think you have flexibility from a pricing perspective, and you can always assess returns. I don't see anything with the conservative nature of our model that would stop us from building at least to 70% over the next five years. Got it. What's the sort of riskiest or the most challenging piece of the deployment side? If you didn't hit your targets by 2025, what would the most likely cause of that be? You know, I can't imagine that happening from where we are, even with all the uncertainty in the world around us. If you look at our inventory and CapEx spend, we've got $60 million in inventory on the things that were, you know, most concerning to us in 2021, you know, kind of lessons learned, access to the Wi-Fi 6 CPE. So that's solved. We've got production lines of fiber that are dedicated to us, and so we feel good about that. We've got labor that we can flex up. We feel good about that. I think the things you worry about are just what we just talked about. It's the macroeconomic issues that affect, you know, people's families with relations in either Ukraine or the you know kind of the whole impact of national- or world- crisis- type things. It's the things out of our control that we're concerned with. I think those things really affect our ability to flex versus hit the 70% target. Got it. Okay. Switching gears a little bit to competitive dynamics in the market. You mentioned 10% of your footprint has an overbuilder. Is that 10% growing? Are there overbuilders still building out in your footprint? There's, you know, very few, but in a couple states, there's some, you know, small, nothing material, small builds going on. We've been, you know, very responsive to those, to make sure people know that, you know, we're deploying, and we're gonna protect our territory. We're able to move fast. You know, we've got resources and facilities, you know, access to conduit, access to poles. Where we've seen a little encroachment, you know, we've been able to stem that interest. It's really not material. That's interesting. When you see guys coming in, and you say, "Hey, we're about to build there," their reaction is generally to pull back? Yeah, I wouldn't be able to broadly say what their reaction has been because we're early into it. You know, just economically, we're larger. We're able to move more quickly. We've got resources in the area, and I haven't seen the interest expand. Got it. What about the response from the cable companies when they see you're in the process of upgrading a market? How do they generally respond? You know, again, it's early, but we haven't seen material responses. You know, through our history, when we got into the video business, cable companies were rational in their response. You know, at this stage, you know, I think we've got a lot of room in our pricing for any competitive response from a promo perspective. We've got a multi-gig network that gives us a ton of flexibility. From a speed perspective, it's symmetrical. I think our playbook works real well to compete effectively. Because, you know, cable TV folks are gonna be formidable competitors, but we're well-positioned. Yep. Have you seen them get more aggressive around pricing and promotions when you're in the process of coming in? Or is it, for the most part, still a very, price- stable market? Yeah. So far it's been relatively price- stable. Even where we've seen them respond, you know, more to the larger folks, like AT&T or Verizon, you know, the competitive pricing are on the lower tier products. We go after a gig and pricing our gig, you know, to compete with the cable 500- meg or middle product that most people have taken in the past. Got it. How has fixed wireless broadband from Verizon and T-Mobile impacted you over the last couple of quarters, Bob? It really hasn't. You know, fixed wireless is generally being deployed where wireless providers have more robust networks and easy access to backhaul. In the areas that we operate in, I'd remind you, are mostly, you know, quite suburban, you know, less dense suburban and rural. We're likely building fiber or have higher speed, you know, 100- meg DSL speeds there. So we watched, you know, the activity very closely. So it's less likely to be a threat in areas, you know, especially like Northern New England based on topography, and how many antennas you'd have to deploy. We feel like we're very well-positioned and have a good opportunity to get the backhaul, you know, call at least when they want to make that kind of investment. We're positioned as either partners or effective competitors. That's a good point, actually, in that when they if they really wanna provide material capacity in your markets on their wireless networks, that you benefit on the wholesale side. Just focusing on the retail side, how much of the market do you think fixed-wireless broadband could ultimately capture? Is it sort of a potentially 5% of the market, 10% of the market? What kind of customers do you think would be fixed wireless broadband subscribers in your footprint as opposed to consolidated or cable customers? You know, my view is, wireless is always gonna be, you know, more mobile, mobility-oriented. But there's always gonna be that place where the topography, the geography works, maybe, the demographic. We just don't see it in our markets. I mean, we've done the analysis. We invest initially in CBRS spectrum, and our ability to deploy fiber where it's cost effective, is a much better return than what we saw in our analysis of fixed wireless for our market. I think geography matters, you know, the density matters, and you know, we think the terrestrial network's gonna win, you know, in most places. Is it 2%, 3%? You know, it's hard to tell. We'll watch the technology evolution closely and we'll partner where it makes sense and deploy it if it, again, makes economic sense in the future. Got it. When I look at your penetration targets of 14%, 24%, 33% after one, two, three years, it strikes us actually as fairly low when compared to some of the targets that peers have put out there, or even what we've seen in realized results from guys like Shentel. Is it a function of the markets that you're in? Are they, is broadband penetration lower in your markets than the national average? Or is it just sort of purely a function of being conservative in your forecasting? I think it's a little of both. You know, certainly our business plan is based on solid returns and you got, you know, I'll remind you of the low cost we're passing. We view our penetration targets as reasonable and tend to exceed them. You know, our 2021, Q1 of 2021 cohorts, so those were new market, new fiber coverage areas that were opened up by the end of the first quarter, are tracking ahead of our plan. So we're very encouraged with the fiber net adds through the end of February, which were over 5,000. And we just launched our new Fidium Fiber product in November for markets in New Hampshire and Vermont. So as we expand the Fidium to legacy markets in Q2, we'll provide more details on cohort penetrations. You know, I think we're very comfortable that we'll exceed our plan targets. Got it. One of the things that you spoke about on the earnings call was increasing marketing spend by $10 million, $15 million this year. How does that sort of mesh with the penetration targets that you've put out? Did you need to increase the marketing spend in order to hit those penetration targets? Yes. Jonathan, it's probably a combination of things that, number one, as Bob said, we just launched the Fidium brand in November. We were very deliberate waiting. You know, we only have one time to launch the brand and prove that first initial customer experience. We really made sure all things were buttoned down and ready to go. We're now, as Bob, you know, again, we've already demonstrated the build capacity. This year is about really getting the sales and customer acquisition machine to kind of sync up and match the cadence of the build plan. Part of this is incremental, maybe a little bit advertising, a little bit of branding support for the Fidium brand launch, but some of it's really just building out the sales force that we need to do to support the current penetration targets and, you know, hopefully overachieve on that, to support the Fidium and the superior product that we're launching i n our markets. Again, I'd say the 15 million that we talked about, probably 1/3 of that is relative to advertising, marketing spend, and the rest of it is probably an investment in infrastructure for door-to-door salespeople, market leaders, and also kind of implementing our MDU strategy over time as well. Got it. I wanna come back to the Fidium brand in a second. I think you announced the launch of the brand a` t our 5G conference back in November, which was fun. One more question on penetration before I get there. 33% is the target after three years. Where does penetration ultimately get to? What's the sort of terminal penetration for the fiber product? Yeah, it depends on the market, but it's 40%. You know, 40, low 40s, in a duopoly, you know, parity environment, and we think that we'll be a superior product, with you know, up to 10- gig capability at the end- user level. You know, when you look at the opportunity in our markets, there's some that will be you know, above 50% because they're single you know, terrestrial-based markets, you know, like the public-private partnership areas. You know, we think 40+ is terminal penetration. Going back to the Fidium brand, has there been a change in pace in your take rate since launching the brand? Similarly, have you noticed any change in NPS scores for customers that are on the new brand versus those that weren't or what the NPS scores were before they transitioned to the new brand? Absolutely. You know, I would say the industry average is in the 20- to 30- point range positive from an NPS rating perspective. The Fidium Fiber has been very well received in the 70 communities where it's launched and is well above that target. I won't give you the specific number, you know, because we're still early in the stages, but it's notably above the 20, 30 range. Consolidated was, you know, better than typical ILECs, but not that high. Yeah, there's a big significant improvement with the Fidium brand launch. It's a much better customer experience from the electronic, you know, digital store and interface that's online experience that's available to our customers. The automated process is much more efficient, you know, all the way through from point of entry on the internet for the order to the dispatch. Got it. We're almost out of time, and I wanna get sort of two questions in on recent results and news before we run out of time. I guess I'm gonna sort of ask two questions at once. One is that since you announced results, the stock has been a little bit under pressure. I'd love your perspective on what you think the market is reacting to, and what do you think the market has wrong. Relatedly, there's been news around Searchlight potentially increasing their stake or maybe buying in the public stake entirely. I'm wondering if there's anything you can share on that perspective and maybe what Searchlight sees that's different than what the public market sees at the moment? Steve, you wanna take the market question first, and I'll finish on the question on Searchlight? Yeah. Jonathan, I mean, you're, it's fair to say that our stock has been under pressure since we released earnings. You know, I think we had a fantastic 2021. With our EBITDA guide, I think we, you know, people were a little bit surprised that we were below. That even if you normalize for the CAF II step down, which everybody knew was coming, it was about $42 million, we were down another $30 million, $40 million, or maybe $ 45 million, $50 million dollars to get to the midpoint of the range. Again, we talked about that on the call, a little bit of tower pressure, a little bit of, you know, the additional investment we just talked to about sales and marketing and a couple of other things. Again, we think we're making investments in the business, for the long haul. I think the initial pressure from the stock was just purely a result of the guide. I think that as we talk to people and remind them of our confidence, in the build plan, that our ability to drive penetration for which again, we need to demonstrate to the market over the next several quarters, which we're confident that we'll do, we think that, you know, fiber is going and the fiber value creation plan is going to win over time. Again, I think our team and our board are, you know, highly confident that we're gonna get it done. The only thing I'd add to that is we're in, you know, an outstanding position to take what we accomplished in 2021 with getting the build engine, finish synchronizing the customer acquisition engine, which we started a little bit later in 2021 than we wanted with the brand launch and coordinating that all the way through the CPE experience and get that all done in 2022. We're packing a lot into 2022 as you see by the sales and marketing investments we're making that impacted the EBITDA guide. We know that. We're off to a great start in 2022 and in first quarter. I look forward to the first quarter earnings call to talk about, you know, the results because it's gonna be an incredible year. With respect to the 13D that Searchlight filed, hey, there's not much we can say that isn't written in the 13D. You know, it's just, it's nice to have a partner like them that you know has been a great contributor to our board. We have to just let that play itself out. But we appreciate the vote of confidence. Got it. Guys, really appreciate your time this morning. This has been great. Thank you very much. Thank you. Thank you, Jonathan. Have a great day.